@ -45,13 +45,12 @@ Although these earlier digital currencies worked, they were centralized and, as
=== History of Bitcoin
((("bitcoin","development of")))((("Nakamoto, Satoshi")))Bitcoin was invented in 2008 with the publication of a paper titled((("Bitcoin: A Peer-to-Peer Electronic Cash System. (Nakamoto)"))) "Bitcoin: A Peer-to-Peer Electronic Cash System," written under the alias of Satoshi Nakamoto. Nakamoto combined several prior inventions such as((("b-money")))((("HashCash"))) b-money and HashCash to create a completely decentralized electronic cash system that does not rely on a central authority for currency issuance or settlement and validation of transactions. The key innovation was to use a distributed computation system (called a((("proof-of-work algorithm"))) "proof-of-work" algorithm) to conduct a global "election" every 10 minutes, allowing the decentralized network to arrive at _consensus_ about the state of transactions. This elegantly solves the issue of double-spend where a single currency unit can be spent twice. Previously, the double-spend problem was a weakness of digital currency and was addressed by clearing all transactions through a central clearinghouse.
((("bitcoin","development of")))((("Nakamoto, Satoshi")))Bitcoin was invented in 2008 with the publication of a paper titled((("Bitcoin: A Peer-to-Peer Electronic Cash System. (Nakamoto)"))) "Bitcoin: A Peer-to-Peer Electronic Cash System,"footnote:["Bitcoin: A Peer-to-Peer Electronic Cash System", Satoshi Nakamoto https://bitcoin.org/bitcoin.pdf] written under the alias of Satoshi Nakamoto. Nakamoto combined several prior inventions such as((("b-money")))((("HashCash"))) b-money and HashCash to create a completely decentralized electronic cash system that does not rely on a central authority for currency issuance or settlement and validation of transactions. The key innovation was to use a distributed computation system (called a((("proof-of-work algorithm"))) "proof-of-work" algorithm) to conduct a global "election" every 10 minutes, allowing the decentralized network to arrive at _consensus_ about the state of transactions. This elegantly solves the issue of double-spend where a single currency unit can be spent twice. Previously, the double-spend problem was a weakness of digital currency and was addressed by clearing all transactions through a central clearinghouse.
((("bitcoin network","origin of")))The bitcoin network started in 2009, based on a reference implementation published by Nakamoto and since revised by many other programmers. The distributed computation that provides security and resilience for bitcoin has increased exponentially, and now exceeds that combined processing capacity of the world's top super-computers. Bitcoin's total market value is estimated at between 5 billion and 10 billion US dollars, depending on the bitcoin-to-dollar exchange rate. The largest transaction processed so far by the network was 150 million US dollars, transmitted instantly and processed without any fees.
((("bitcoin network","origin of")))The bitcoin network started in 2009, based on a reference implementation published by Nakamoto and since revised by many other programmers. The implementation of the proof-of-work algorithm (mining) that provides security and resilience for bitcoin has increased in power exponentially, and now exceeds that combined processing power of the world's top super-computers. Bitcoin's total market value is estimated at between $5 billion and $10 billion US dollars, depending on the bitcoin-to-dollar exchange rate. The largest transaction processed so far by the network was $150 million US dollars, transmitted instantly and processed without any fees.
Satoshi Nakamoto withdrew from the public in April of 2011, leaving the responsibility of developing the code and network to a thriving group of volunteers. The identity of the person or people behind bitcoin is still unknown. However, neither Satoshi Nakamoto nor anyone else exerts control over the bitcoin system, which operates based on fully transparent mathematical principles. The invention itself is groundbreaking and has already spawned new science in the fields of distributed computing, economics, and econometrics.
.A Solution to a Distributed Computing Problem
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((("Byzantine Generals Problem")))Satoshi Nakamoto's invention is also a practical and novel solution to a problem in distributed computing, known as the "Byzantine Generals' Problem." Briefly, the problem consists of trying to agree on a course of action by exchanging information over an unreliable and potentially compromised network. Satoshi Nakamoto's solution, which uses the concept of proof-of-work to achieve consensus without a central trusted authority, represents a breakthrough in distributed computing science and has wide applicability beyond currency. It can be used to achieve consensus on decentralized networks to prove the fairness of elections, lotteries, asset registries, digital notarization, and more.
Andreas M. Antonopoulos
9 years ago